So, if the loan is terminated early, does the borrower have to pay extra money to get out of the contract? If so, does that mean any financial penalty payment is passed onto the lenders who have taken on the loan, in anticipation of it going the full term?
I understand borrowers can repay early (certainly better than going overdue) and unlike some other platforms I haven't read of minimum contractual interest payments although SS would be in line for their standard exit fee of 2%.
Back in the good ol' days, when savingstream were more open and transparent, they used to indicate what the 'Loan Term (min)' was. For an example, look at the Bridging Loan Particulars document for PBL031, which shows a six month minimum. IIRC, if a loan was paid off before the minimum term had passed, the investor holding the loan on the repayment day received the 'bonus' interest.
But that was then, and this is now. SS no longer let us have this info. There may be a minimum term specified in the loan contract, but we don't know about it. And if there's a benefit to be had from such a clause because a borrower repaid early, I really don't expect that SS would give any of it to their investors.
... microsculptures. Wonder when cashback will be applied to fill it?
No need. It's already filled by underwriter funds so unlikely FS will want to pay again.
SteveT: Doesn't this also depend on the underwriting agreement? I expect the underwriters are being paid more than 12% p.a. while their funds are tied up. If FS think they're going to be paying the high underwriters' rates for an extended period then they might decide to offer incentives to fund the loan and get rid of the underwriters. Having said that, though, the loan is nearly 60% full now and if they do offer incentives they'd probably have to give those to the investors already committed to the loan, so it might be cheaper for them to pay underwriter rates on part of the loan and 12% on the rest than to pay incentive rates on the whole loan. There's also the possibility that the incentives wouldn't work and they'd end up paying incentive rates on part of the loan and underwriter rates on the rest.
ISTM that something -- probably FS's long list of overdue loans -- is taking a toll on investor confidence. Whereas renewals used to go live on the platform showing to be 60-70% filled via rollover investments, nowadays the rollover percentage seems to be down to the 30-40% range. (That's what happened with Southampton and Carlisle this week.)
I raised the questions below when this loan first was brought to the platform. fundingsecure didn't respond at that time and, since the info for the loan is the same now as it was back in December, the questions remain. Perhaps FS will be so kind as to provide some answers at this time.
We will be posting a new loan at 5pm today, 14th December
Loan secured by a second legal charge against a property in Bath with a value of £345,000 Loan Amount: £30,000 Interest: 13%pa LTV: 68.1%
fundingsecure : The loan description says that the first charge is for £208k. (208+30)/345=69%. So how was the 68.1% LTV calculated?
Also, when I "click on the link to view an appraisal of selling price for the property", I'm presented with a 1-page document that appears to be the starting point for a search for properties for sale in BA2 in a price range of £325k to £425k by one particular agent in the past six months. I can't see how that relates to the value of the security for this loan. What am I missing?
Sooner or later SS' omission of "stuff" is going to catch up with them and bite their posterior and even The Lemmings will turn back from the cliff.
The omissions are that the property is being purchased out of receivership, the purchase price, and the amount of developer equity, and from the loan particulars the full facility value (which has been brought to my attention is stated in the letter of instruction), and the personal guarantee value. If it was an unrelated borrower with a successful record as a developer I'd look on the loan with greater favour.
The instructions to the valuer might have included a suggestion of the total amount SS/Lendy were considering lending, but you can be sure they wouldn't feel obligated to stop at that amount if they didn't want to. Since we can't rely on it, we really do have no idea how much actually might be lent against this security. And, possibly more importantly, SS haven't given us any idea how their lending might be related to the value of the development, which is to say we haven't a clue what the LTV actually will be during, and at the end of, the development project.
IMHO, we're being offered a pig in a poke -- and I won't be buying. Not at 9%, and not even if it were at 12%.
Yes, this loan was oversubscribed, but with only 1000 pre-funders and a maximum allocation amount of £3,320 I don't get the feeling there was a lot of enthusiasm for it. The changes coming into effect on 1/Mar aren't going to encourage platform enthusiasm either, so it will be interesting to see where things go from here. I think I'll be watching from the sidelines.
Beware a change in bonus rates for the 5 to 10k band. Was 1% will be 1/2% according to messages reveived yesterday.
Then again, the base interest rate for the loan has increased from 12% to 13%. So someone with a £5-10k investment in the old loan would have been accruing 13% (12%+1%), and if their investment is rolled forward into the new loan they'll accrue 13.5% (13%+0.5%). Personally, I'd prefer the latter, although the new loan's higher LTV means the comparison isn't that simple.
I thought that you kept the interest up to the point where you put in on the SM, not up to then point it sells.
You do (unless you cancel the SM listing before the end the month) - all this kerfuffle about the new negative loan rules I forgot about the SM, which still presumably applies
This could become a policy with considerable impact if SM liquidity drops significantly when the changes come into effect. Up to now, investors didn't have to worry very much about how much interest they might lose when putting parts on the SM because it rarely took long to sell a part.
If the typical time from offering to selling stretches to a week or more, SS may need to rethink this policy, which made some sense when SS effectively were funding SM sales via INPL but might not after INPL is gone and all SM purchases are funded by cash sitting in the SS client account.
There's no point in trying to sell PBL020 parts, simply because they aren't being bought. I put a part up for sale on 5/Oct, and it's still in the queue.
I am sorry to hear that you have a vested interest in PBL020.
To reiterate, I wish you the best possible result with PBL020.
twoheads: Thanks for your good wishes, though I really don't deserve them. I wasn't holding any PBL020 when it acquired its red box -- I think I had some before that, but I must have sold my holding at some point -- but I bought some subsequently so that I could sell a bit in order to monitor the movement of the sales queue. The part I put up for sale on 5/Oct was all of 1p!
At this point I have 3x1p in the sale queue and a further 3p in my account that I could sell. I'm not losing any sleep over my investment!
I do hope the investors who are holding the other £1.7M of parts of this loan do get out reasonably OK, and it will be informative for all of us to see how the PF is used to ease the pain of the shortfall, which I expect to be significant.
Because they want to start spending their inheritance NOW?
I don't buy that. Maybe just the cynic in me.
I'd say people do this sort of thing all the time. They take out payday loans so they can spend their next paycheck before they get it. Those in a better financial position do the same, but they use credit cards. (I know there are better rates available for those who can be bothered to look for them and act on what they find, but those who don't do this probably are paying credit card interest rates that aren't so very different from FS rates.)
And businesses also do it all the time -- they call it invoice factoring. A couple of ventures doing this on a P2P basis used to be Market Invoice and Platform Black.